Cours 4

Question 1

What is a controllable margin?

Answer 1

It determines the contribution of a cost object (product, activity, service, project,…) to covering common fixed costs and income.

Question 2

What is the formula of the controllable margin?

Answer 2

Controllable margin = Total CM - Direct Fixed Costs

Question 3

What happens if all of the fixed costs are common?

Answer 3

We need to calculate the CM to help us make a decision. If the CM is positive, none of the products should be eliminated from a quantitative standpoint.

Question 4

What happens if there are direct fixed costs?

Answer 4

We need to calculate the controllable margin. If the controllable margin is positive, we should continue to manufacture the product from a quantitative standpoint.

Question 5

What is the margin per unit of limited resources?

Answer 5

• The contribution margin of the product is calculated as a function of the number of units required of the limited production factor.
• Production factors are the resources used in production.
• Margin used in a situation where there are multiple products and the company has a limited production resource.
• From a quantitative point of view, the production that yields the greatest margin per unit of limited resource is the one that will be prioritized to maximize income.

Question 6

What is the formula for the margin per unit of limited resources?

Answer 6

Contribution margin per unit/limited resource per unit